The number of Americans seeking unemployment aid fell last week to a seasonally adjusted 339,000, the second-lowest level in more than five years. The decline suggests hiring is improving from last month's sluggish pace.
Applications for unemployment benefits dropped by 16,000, the Labor Department said Thursday. The four-week average declined 4,500 to 357,500.
Applications are a proxy for layoffs. When they decline, it signals that companies are cutting fewer jobs. Still, layoffs are only half of the equation. Businesses also need to be confident enough in the economic outlook to step up hiring.
Economists were encouraged by the report, though some cautioned against reading too much into one week's data.
"The downtrend in unemployment remains on track," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics.
In March, employers added only 88,000 jobs. That was a sharp drop from the previous four months, when hiring averaged 220,000 per month.
The unemployment rate fell to 7.6 percent from 7.7 percent. But the drop occurred because more people out of work stopped looking for jobs. The government doesn't count people as unemployed unless they are actively looking for work.
Most economists expect hiring improved this month from March's low level. Some economists expect net job gains increased to about 150,000.
The economy is expected to have grown at a much quicker pace in the January-March quarter. Most economists forecast growth accelerated to an annual rate of more than 3 percent in the first quarter, up from just a 0.4 percent rate in the fourth quarter.
But many analysts now expect growth is slowing in the April-June quarter, mostly because across-the-board government spending cuts that began on March 1. That may have made businesses nervous about adding jobs.
Here are the states with the biggest increases and decreases in unemployment benefit applications. The state-level data are one week behind the national figures.
States with the biggest increases:
California: Up 24,303, due to layoffs in services
Texas: Up 3,050, no reason given
Florida: Up 2,623, due to layoffs in the manufacturing, construction, services, retail and trade industries
Indiana: Up 2,372, due to layoffs in manufacturing
Arizona: Up 1,296, no reason given
States with the biggest decreases:
New York: Down 14,113, due to fewer layoffs in the transportation, educational services and food services
Michigan: Down 5,998, due to layoffs in the enterprise industry
New Jersey: Down 4,204, due to fewer layoffs in educational services, hotels and restaurants, transportation and warehousing, construction and manufacturing
Ohio: Down 3,036, due to fewer layoffs in manufacturing, transportation and communications
Illinois: Down 2,455, no reason given